In Sanskrit the name for these marks is tilaka, which literally means, “ornament.” In Hindi the word is shortened to tika. There are three basic uses for tilaka marks. Two are most common: the mark (bindu) worn by ladies as part of their makeup, and the red “dot” that is applied during puja. A third use has to do with religious designation and is worn primarily by priests and other religious people.
In kulalini-yoga certain places on the body are known as chakras or places of “psychic openings.” One of the most important of these places is the space between the eyes just above the eyebrows. This is sometimes called the place of the third eye. Commonly ladies will mark this place with makeup or a stick-on bindu (in Hindi it is called a bhindi). Similarly, during puja a priest will apply a dot of red powder (called kukumam) at this same location to both man and ladies. I sometimes think of applying the red tilaka during puja as “logging the person in” to the puja. I explain the tilaka mark by saying: God has given us two eyes by which we see the physical world, now this tilaka is a symbolic third eye by which we can see spiritual reality.
The tilaka marks worn by priests and other religious people has a completely different purpose. Essentially the lines of tilaka are sectarian marks that indicate which school of Hindu theology (sampradaya) the person is coming from. They are identification marks. There are three categories indicating the three basic grouping within Hunduism. Horizontal lines for followers of Shiva (Shaivas see...), vertical lines for followers of Vishnu (Vaishnavas see...) and straight on marks for followers of Devi (Shaaktas). Within each of these categories of devotees there are many variations, black lines, red lines, yellow lines, curved lines, rounded lines, and so on. Each of these configurations indicate the particular school of theology within each group, and there are many many designation even within a single group. See the illustrations that show a few of the main designations.
These kind of tilaka are applied not just on the forehead as in the case of the bindu or tilaka during puja, but are applied to many different locations on the body above the waist. Usually there are 12 locations, but this can vary according to the sampradaya. You might think of this as marking the body as a temple of God. Each time a tilaka is applied a mantra or name of God is recited. In this way the body is sanctified. This affects not only the wearer of these marks, but also observers. “Oh this man is a Shaiva priest, I see his tilaka. I am in the presence of a priest.”